ARE EMPLOYMENT POLICIES SET UP EFFECTIVELY? CASE STUDY OF SELECTED EU COUNTRIES AND SLOVAKIA.

• Author: Pisar, Peter

1. Introduction

   As passive employment policy began to develop in the 1920s and its importance was found to be crucial, the focus of the policy began to shift to its active components. The importance of active employment measures was first emphasized in the 1993 White Paper when the Luxembourg Summit approved the first set of guidelines aimed at moving towards a more proactive and preventive approach. Active employment policy has become a more flexible instrument of public support, with the European Commission recommending EU countries to allocate their resources in active instruments of employment support in the fight against persistent unemployment.

   The aim of the paper is to examine whether the instruments of active employment policy in individual EU countries using the LMP database (Labour Market Policy Database) have been effectively set up, as there is a clear difference in the allocation of public expenditure and how it is provided depending on specific support programs. We will confront the results of our findings with the conclusions of published academic studies, which point to the positive or negative effects of specific employment programs in EU countries together with a detailed examination of their focus in Slovakia. By the synthesis of the knowledge we have acquired, we can talk about a relatively effective or ineffective setting of their policies in a narrower context, as we abstract from other factors (1).

   The contribution and originality of this paper lies in the connection of a detailed view of instruments of active employment policy with the findings of academic research on the effectiveness of specific employment programs.

   The article consists of three parts. The first part is a literature review, which emphasizes the current state of research in the field of evaluation of instruments with emphasis on the development of evaluation of education programs. The results are further compared with academic research in evaluating the effectiveness of active employment policy instruments published in European studies. The methodological part defines the goal of the research and the research questions. The results and the discussion combine the knowledge gained regarding the expenditure side of employment policies of EU countries and the findings of published studies. The discussion also generalizes the obtained results and presents proposals for further research in this area for Slovakia and for selected EU countries.

2. Literature review

   Most evaluation studies focus on a microeconomic evaluation approach, which examines individuals by time, type of program and target group. There are already many good reviews of the microeconomic literature in academia (Kluve, 2006; Betcherman, Olivas and Dar 2004; Card, Kluve and Weber, 2010, but they lack a link to the expenditure side of employment policies and an overall capture of policy settings, from its funding to evaluation. They are mainly focused only on grouping the results of realized studies for a certain period; an example of such a study in Slovakia is the study of Kucharcikova, Miciak and Konusikova (2017).

   We notice the largest expansion of European studies on the effectiveness of active employment policy in Sweden. We also see a wide range of studies in Germany (Annex 1). The key literature in the evaluation of public expenditure in the field of active employment policy is attributed to the authors Martin (2014) and Stefanik et al. (2014). Other studies have examined research expenditure on employment policy according to the LMP database (Havran, 2011; Lechner and Wiehler, 2011; Walter, 2013; Kluve, 2006). The studies carried out so far do not identify significant differences in the results of measures within developed or less developed countries; rather, these countries differ in the types of instruments they apply to a greater extent. The differences are also given by the specifics of individual countries captured in the LABREF database (Labour Market Reforms Database), e.g., specific programs for migrants or young people.

   In examining the operation of the tools, we encountered many studies that have positive effects on unemployment (especially in the field of education and start-ups). Only a small group of studies report negative effects. For example, a study (Borra et al., 2012) from Spain captures the negative effects of education programs on the long run, as did Sianesi (2001) from Sweden, and the studies by Bolvig, Jensen and Rosholm (2003) and Rosholm and Skipper (2003). Weber and Hofer (2004) talk about the zero effects of educational activities on the long run. In contrast, the Swedish (Larsson, 2003) and German (Fitzenberger and Speckesser, 2007) studies attribute zero to negative effects to short-term effects, and educational programs are slightly positive in the long run. This may be partly due to the type of training and whether the training is provided by companies (in practice) or whether these educational activities are 'in the classroom'. The scope or type of training also plays an important role.

   Several other studies on education are appearing in Slovakia. For example, in a national study by Pisar et al. (2020), which evaluated the contribution to the REPAS + education program (retraining courses) in the Banska Bystrica Region, we observe very low efficiency. The effectiveness of the tool was also addressed in the SAO study (2018), which analyzed only selected districts for the period 2014 to the first half of 2017. The authors van Ours (2001), Borik and Caban (2013) and Borik et al. (2015) found a positive impact of the training. In contrast, the study by Tiruneh, Stefanik et al. (2014) found a negative effect over 15 months (long term). From the results we can conclude that the field of education as well as incentives to support employment (Havran; 2011; Barosova et al., 2012; Lubyova, Stefanik et al. 2015 and 2016) are key areas of active employment policy in Slovakia.

3. Methodology and data

   We assess the evaluation of employment policy instruments in the 27 EU countries. Our main research goal is to examine the focus and effectiveness of employment policy instruments in selected EU countries, including Slovakia, based on the LMP database regarding previous academic research.

   Research question 1: What is the structure of employment policy instruments and the volume of allocation of expenditures for their support in EU countries, including Slovakia? We examine the structure and volume of the allocation of employment policy instruments through descriptive statistics and cluster analysis. Cluster analysis is created using a non-hierarchical distribution according to the K-means method. By identifying what instruments countries are investing in and to what extent, we will respond to the first part of the goal, namely the focus of countries on employment policy. The methodology of research question 1 is based on the LMP database (2) (Eurostat), which is used by authors such as Martin (2014) and Stefanik et al. (2014), but also by EU policy makers.

   Research question 2: What is the effectiveness of employment policy instruments in EU countries, including Slovakia, based on published academic studies? The research question uses a synthesis of published academic studies in research to identify the effectiveness of employment policy instruments. The efficiency is redistributed according to the sections of the LMP database. We focus on the results of the studies and the method used. Finally, we evaluate whether existing studies on the effectiveness of the tools are in line with the focus of the given country (comparison with research question 1). The reference period is 2017, regarding the development of 2012-2017. The chosen program for the evaluation of statistical data is the SPSS program.

4. Results

   The first selected characteristic is the expenditures for 2017, which we examine according to the percentage of GDP of the 27 EU countries for each section of the LMP database separately. Table 1 describes the expenditure on tools in the LMP database. If we look at the average value and the standard deviation, we see that the values of EU countries are more dispersed and there are more significant deviations from the average. This fact confirms our reason for research.

   The highest average expenditure under active instruments is achieved in section 1 Employment Services with an average value of 0.132% [+ or -] 0.119 p.p. The average values of the other sections gradually decrease, while section 7 achieves an average value of 0.016% [+ or -] 0.035 p.p. Tools from sections 5.6 and 7 achieve their minimum values of zero (maximum values are highest in section 4 - 0.479% and in section 1 - 0.456%). Within passive instruments, the average value is at a much higher percentage, namely 0.644% [+ or -] 0.519 p.p. Section 9 is of low significance, as it includes only 12 countries (other values are not available).

   From the point of view of countries, Denmark (almost 2% of GDP on active measures) and Sweden (1.22% of GDP) draw the largest amount of funding. Romania is the country with the lowest share of individual measures in the LMP database; the situation is similar in Cyprus. Slovakia is one of the countries with the lowest expenditure on active measures (0.22% of GDP). Only countries such as Romania, Cyprus, Bulgaria, Greece, and Latvia show lower funding.

   The development is relatively similar for the whole monitored period (2012-2017) according to the LMP database...